Coal power with us for decades: Ferguson

Federal Resources and Energy Minister
Martin Ferguson
has admitted it could be decades before Australia develops an economically viable alternative to coal-fired power generation.

But Mr Ferguson said the nation had no choice but to invest millions of dollars of taxpayers’ money into clean energy such as wind, solar and geothermal to reach the renewable energy target of 20 per cent by 2020.

“Right across the board, the approach of government is to invest in clean energy technology. We are not going to try and pick winners as to which will succeed," Mr Ferguson said in an interview with The Australian Financial Review.

“No one knows by 2030 or 2040 at this stage which is going to produce the biggest breakthrough in terms of reliability and cost. It’s too early to pick."

The federal government and the Coalition are committed to meeting the 20 per cent renewable energy target by 2020, despite industry doubts the ambitious goal can be achieved.

Origin Energy chief executive
Grant King
said a 25 per cent target by 2025 was more realistic, given the backlog of renewable energy projects to be pushed through from 2015.

Australia’s current renewable energy usage is about 8 per cent, the same level as a decade ago.

As the federal government negotiates with brown-coal producers in Victoria and South Australia to phase out 2000 megawatts of power from the national electricity market, Mr Ferguson said he was confident gas-fired power and renewables such as wind, solar and geothermal would help fill the gap.

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He defended clean-coal technologies such as carbon capture and storage, despite doubts about its economic viability. The ZeroGen project in Queensland – which had been allocated about $150 million of state and federal funds – went into external administration this month.

Mr Ferguson said the Gorgon liquefied natural gas project in north-western Australia would be the world’s biggest commercial deployment of carbon capture and storage when it opened in 2014-15.

“Carbon capture and storage is a proven technology, the issue is reducing the cost of commercial deployment," he said. “The use of fossil fuel – both thermal coal and gas – is not going to decrease."

Mr Ferguson, who recently chaired a meeting of energy ministers from around the world at the International Energy Agency in Paris, said the agency’s world outlook report, to be released next month, would reflect the dominance of fossil fuels.

“They will see a growth in renewables but it reinforces fossil fuels are a fact of life," he said. “I think, across the whole clean energy agenda, we are challenged. The only proven form of clean energy of a baseload and reliable nature is actually nuclear from a global point of view."

The federal government has received expressions of interest from five power generators to take part in its contract-for-closure scheme.

It is aiming to buy out 2000 megawatts of the dirtiest power-generating capacity by 2020 but has not revealed how much money it would pay the companies to close down.

The companies also have to bid a minimum amount that they would take from the government to shut down their capacity by agreed amounts.

Though the big brown-coal generators, including TRUenergy’s Yallourn and International Power and GDF Suez’s Hazelwood in Victoria and Alinta’s Playford in South Australia, have expressed interest, it seems unlikely all will close.

TRUenergy chief executive
Richard McIndoe
said the brown-coal operators supplied 95 per cent of the energy in Victoria.

“A closure of any of those big four power stations will need to be done carefully to ensure there wasn’t any interruption to power supply," Mr McIndoe said.

“I think it will be very challenging for the Victorian economy to sustain the parallel closure of the two of the [big] power stations there [Yallourn and Hazelwood].

“I think you will see one or the other of them close rather than both."

Mr McIndoe, who last week announced the company would build two new 500-megawatt gas-fired power stations in Queensland, said it was too early to tell whether it would shut down Yallourn.

“They’ll need to flesh out the rules of the game first," he said.

Mr Ferguson said that though the government was committed to the closure of the dirtiest coal stations, there would be limits to the financial compensation.